- The trader is down more than 35% on a $114 million position.
- They bet on Ethereum’s price going down.
- But Ethereum has risen to its highest price since January.
Ethereum just vaulted over $2,800 for the first time since January, and one Hyperliquid trader is now in a staring contest with the liquidation gods.
That’s because the trader is sitting on a $114 million short, and Ethereum’s price just needs to rise by another $80 to wipe it all out.
Ethereum is up more than 4% on Wednesday, continuing its positive price performance this quarter. It has already soared more than 70% in just two months, more than double the gains posted by Bitcoin and Solana within the same period.
With market momentum on Ethereum’s side and analysts estimating that the $3,000 mark is not far away, highly leveraged bears are facing margin calls.
Onchain data from HyperDash, a platform for tracking trades on Hyperliquid, shows the trader took up a short position on Ethereum when its price still hovered below $2,800. The trader borrowed 15 times their initial trading capital to make the bearish bet on Ethereum.
Short selling requires borrowing an asset to sell it at a high price, with the plan to buy it back at a lower price and pocket the difference. The trade pays out if the price of the asset falls. Adding leverage to the mix can maximise these gains, as well as any losses.
The higher the leverage, the more brutal the maths. At a 15-to-1 leverage ratio, the asset only needs to rise 3.75% to liquidate the position.
That would have already happened if the trader hadn’t shored up their position by adding $3.37 million worth of USDC to their posted collateral. The move nudged the liquidation price higher, but the trader is still down 35%, nursing an unrealised loss of over $2.7 million.
On Hyperliquid, such massive losses aren’t rare. The onchain derivatives exchange allows users to take massive leveraged bets on crypto perpetuals, derivatives contracts without expirations.
But with volatile crypto prices, high leverage can make quick fortunes for traders and erase them just as swiftly.
Just as the trader who goes by James Wynn.
Already popular for audacious memecoin punts, Wynn captured headlines in May for a $1 billion bet on Bitcoin’s price going higher.
The position soared to $100 million in profits in short order as Bitcoin rose to a new all-time high above $111,000. However, Bitcoin fell below $103,000, wiping out the gains and liquidating the position.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at [email protected].
